Papa Johns 2014 Annual Report Download - page 28

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and diversion of resources, which could negatively affect our results of operations, regardless of the
outcome.
Disruptions of our critical business or information technology systems could harm our ability to conduct
normal business.
We rely heavily on information systems, including digital ordering solutions, through which
approximately half of our domestic sales originate. We also rely heavily on point-of-sale processing in
our restaurants for data collection and payment systems for the collection of cash, credit and debit card
transactions, and other processes and procedures. Our ability to efficiently and effectively manage our
business depends on the reliability and capacity of these technology systems. In addition, we anticipate
that consumers will continue to have more options to place orders digitally, both domestically and
internationally. Our failure to adequately invest in new technology, particularly our digital ordering
capabilities, could cause us to lose our competitive advantage and have an adverse effect on our results.
Our systems could be damaged or interrupted by power loss through various technological failures or acts
of God. In particular, we may experience occasional interruptions of our digital ordering solutions, which
make online ordering unavailable or slow to respond, negatively impacting sales and the experience of
our customers. If our digital ordering solutions do not perform with adequate speed, our customers may
be less inclined to return to our digital ordering solutions, as frequently or at all. If our systems do not
operate properly, we may not be able to fully realize the significant investment we have made in these
systems, and we may need to upgrade or replace these systems, which could require additional material
capital investment from us and our franchisees. Part of our technology infrastructure, such as our FOCUS
point of sale system, is specifically designed for us and our operational systems, which could cause
unexpected costs, delays or inefficiencies when infrastructure upgrades are needed or prolonged and
widespread technological difficulties occur. Significant portions of our technology infrastructure are
provided by third parties, and the performance of these systems is largely beyond our control. Failure of
our third-party systems, and backup systems, to adequately perform, particularly as our online sales grow,
could harm our business and the satisfaction of our customers. In addition, we may not have or be able to
obtain adequate protection or insurance to mitigate the risks of these events or compensate for losses
related to these events, which could damage our business and reputation and be expensive and difficult to
remedy or repair.
We may incur significant costs or loss of sales and consumer confidence resulting from a security breach
of our critical systems, network sites or service providers, including a breach of confidential customer
information from our digital ordering business.
We are subject to a number of privacy and data protection laws and regulations. Our business requires the
collection and retention of large volumes of internal and customer data, including credit card data and
other personally identifiable information of our employees and customers housed in the various
information systems we use. Constantly changing cyber security threats pose risks to the security of our
systems and networks, and the confidentiality of our data. As techniques used in cyber attacks evolve, we
may not be able to timely detect threats or anticipate and implement security measures. The integrity and
protection of that customer, employee and Company data is critical to us. The failure to prevent fraud or
security breaches or to adequately invest in data security could harm our business and revenues due to the
reputational damage to our brand. Such a breach could also result in litigation, regulatory actions,
penalties, and other significant costs to us and have a material adverse effect on our financial results.
Changes in privacy law could adversely affect our ability to market our products effectively.
We rely on a variety of direct marketing techniques, including email, text messages and postal mailings.
Any future restrictions in federal, state or foreign laws regarding marketing and solicitation or